The U.S. Securities and Exchange Commission announced last Friday that it would charge six former Fannie Mae and Freddie Mac executives with securities fraud. The complaints against the Fannie and Freddie executives allege that "they knew and approved of misleading statements claiming the companies had minimal holdings of higher-risk mortgage loans, including subprime loans."

Robert Khuzami, director of the SEC's enforcement division, issued the following statement:

Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was. These material misstatements occurred during a time of acute investor interest in financial institutions' exposure to subprime loans, and misled the market about the amount of risk on the company's books. All individuals, regardless of their rank or position, will be held accountable for perpetuating half-truths or misrepresentations about matters materially important to the interest of our country's investors.

Hans Bader, senior attorney and counsel for special projects with the Competitive Enterprise Institute, in his recent entry on OpenMarket.org, discussed Fannie and Freddie's dishonesty about their culpability for the mortgage crisis and additionally, cited the legislature's failure to hold the two large government-sponsored enterprises responsible, choosing to instead deal with the financial crisis by passing onerous regulations.

Recently, Congress passed a confusing, 2,315 page law to regulate the financial industry called the Dodd-Frank Act. But it does absolutely nothing about Fannie Mae, which it left completely unreformed despite the fact that taxpayers will end up paying over $100 billion to bail out Fannie Mae. Instead, the Dodd-Frank Act delegates to largely-unaccountable agencies the power to write innumerable new regulations restricting the economy, violating the constitutional separation of powers, equal protection, and property rights.

The SEC charges serve as an affirmation to many who did not buy the claims that Fannie and Freddie were not involved in the subprime mortgage market. Fannie and Freddie each entered into non-prosecution agreements with the SEC in which each company agreed "to accept responsibility for its conduct and not dispute, contest, or contradict the contents of an agreed-upon Statement of Facts without admitting nor denying liability."